<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Isco, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
ISCO, INC.
4700 Superior Street
Lincoln, Nebraska 68504
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held December 9, 1999
The annual meeting of shareholders of Isco, Inc. will be held at Isco, Inc.'s
corporate headquarters, 4700 Superior Street, Lincoln, Nebraska on December 9,
1999 at 2:00 p.m. for the purpose of:
1. The election, as Directors, of three persons listed in the accompanying
Proxy Statement dated November 5, 1999
2. The approval of Amendment No. 1 to the Isco, Inc. 1996 Stock Option
Plan.
3. Whatever other business may properly be brought before the meeting or
any adjournment thereof.
Only those shareholders of record at the close of business on October 15, 1999
shall be entitled to notice of the meeting and to vote at the meeting.
In order to assure a quorum, all shareholders are urged to attend the meeting or
to vote by proxy.
SHAREHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE IN PERSON EVEN THOUGH THEY
HAVE VOTED BY PROXY.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING AND YOUR ISCO SHARES ARE HELD BY YOUR
BROKER FOR YOUR ACCOUNT AND YOU DO NOT PERSONALLY HOLD THE CERTIFICATES FOR THE
SHARES, YOU SHOULD MARK THE PROXY TO INDICATE THAT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU WILL THEN RECEIVE A "LEGAL PROXY" SHOWING THE NUMBER OF SHARES YOU
OWN. BRING THAT "LEGAL PROXY" TO THE ANNUAL MEETING AND YOU WILL THEN BE
CREDITED WITH VOTING YOUR SHARES IN PERSON AT THE MEETING.
By Order of the Board of Directors
Robert W. Allington
Chairman and Chief Executive Officer
November 5, 1999
<PAGE>
PROXY STATEMENT
November 5, 1999
GENERAL INFORMATION.
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Isco, Inc. (the "Company") for use at the annual
meeting of shareholders to be held on December 9, 1999. Shareholders of record
at the close of business on October 15, 1999 are entitled to notice of and to
vote at the meeting and any adjournment thereof.
This Proxy Statement was first mailed to shareholders on November 12, 1999.
As of the close of business on October 15, 1999, the Company had 5,643,992
shares of common stock outstanding ("Common Stock"), all of which are entitled
to vote at the annual meeting.
As of the record date, Robert W. Allington, owned 2,748,722 shares or 47.47
percent of the Company's outstanding Common Stock plus currently exercisable
stock options. On the record date, Dimensional Fund Advisors, Inc. and UMB Bank,
n.a. owned 500,051 and 354,664 shares, respectively, or 8.86 percent and 6.28
percent, respectively, of the Common Stock outstanding. Neither Dimensional Fund
Advisors, Inc., nor UMB Bank, n.a. hold any stock options.
Each shareholder is entitled to one vote for each share on each matter
presented, except that in the election of Directors each shareholder shall have
the right to vote the number of shares owned by him or her for as many persons
as there are Directors to be elected, or to cumulate such shares and give one
candidate as many votes as the number of Directors multiplied by the number of
his or her shares, or to distribute them on the same principle among as many
candidates as he or she shall determine.
Proxies which are properly signed and returned will be voted at the annual
meeting. Shareholders may specify their preference by marking the appropriate
boxes on the proxy and the proxy will then be voted in accordance with such
specifications. In the absence of such specifications the proxy will be voted
"FOR" the election of the three nominees for Director, "FOR" the amendment No. 1
to the 1996 Stock Option Plan, and in accordance with the instructions of the
Board of Directors as to any other matters. A proxy is revocable at any time
before it is voted and a proxy is automatically revoked upon the giving of a
subsequent proxy. The Company will bear the cost of solicitation of proxies,
including the charges and expenses of brokers and others for forwarding
solicitation material to shareholders. In addition to the use of mail, proxies
may be solicited by personal interview, telephone, facsimile or telegraph.
SHAREHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE IN PERSON EVEN THOUGH THEY
HAVE VOTED BY PROXY.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING AND YOUR ISCO SHARES ARE HELD BY YOUR
BROKER FOR YOUR ACCOUNT AND YOU DO NOT PERSONALLY HOLD THE CERTIFICATES FOR THE
SHARES, YOU SHOULD MARK THE PROXY TO INDICATE THAT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU WILL THEN RECEIVE A "LEGAL PROXY" SHOWING THE NUMBER OF SHARES YOU
OWN. BRING THAT "LEGAL PROXY" TO THE ANNUAL MEETING AND YOU WILL THEN BE
CREDITED WITH VOTING YOUR SHARES IN PERSON AT THE MEETING.
SHAREHOLDER PROPOSALS.
In the event that any shareholder desires to submit a proposal for action at the
2000 annual meeting of shareholders, such proposal must be received at the
Company's office at 4700 Superior Street, Lincoln, Nebraska 68504-1398, marked
to the attention of the President or Secretary of the Company, no later than
July 15, 2000. It is suggested that any shareholder desiring to submit a
proposal, do so by Certified Mail, Return Receipt Requested. Shareholders should
also note that, in addition to the requirement of timely receipt by the Board of
Directors of a proposal as stated above, such proposal will not be included in
the proxy solicitation material for the 2000 annual meeting of shareholders
unless it otherwise complies with the requirements of Section 14(a) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated and in
effect thereunder.
2
<PAGE>
1. ELECTION OF DIRECTORS.
The Bylaws of the Company provide that the number of Directors shall be not more
than nine, such number to be set annually by the Board of Directors.
The Bylaws also provide that the Directors shall be divided into classes and
that there be two classes if the number of Directors is less than nine. The
second class has a term expiring December 14, 2000 and the first class has a
term expiring upon the adjournment of the 2001 annual meeting of shareholders,
currently scheduled for December 13, 2001. The Board of Directors has nominated
Robert W. Allington, James L. Linderholm, and Dale L. Young for election to the
first class to serve a two-year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM NO. 1.
The proxy holders named in the proxy intend to vote "FOR" the election of the
three nominees listed above unless authority to so vote is withheld. In the
unexpected event that any of the nominees are unable to serve or for good cause
will not serve as a Director, the proxy holders reserve the right to vote for
such substitute nominees as are designated by the Board of Directors.
Following is a list of the names and ages of the three nominees, each of whom is
presently serving as a Director. Also listed are the four Directors whose terms
expire in 2000. Included is the past five-year business history of each nominee
and each Director, the year in which each became a Director of the Company, and
the number and the percentage of outstanding shares of Common Stock of the
Company beneficially owned by each as of October 15, 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
COMMON STOCK
BENEFICIALLY OWNED AS
OF OCTOBER 15, 1999
------------------------
NUMBER
DIRECTOR OF
NAME OF INDIVIDUAL AGE EMPLOYMENT HISTORY SINCE SHARES(1) PERCENT(2)
- --------------------- --- ------------------------------------------------ -------- -------------- ----------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION TO THE FIRST CLASS (TERM EXPIRING DECEMBER 13, 2001):
Robert W. Allington 64 Chairman of the Board and Chief Executive 1959 2,748,722 47.47
Officer since 1959; President 1959 to October 5,
1995.
James L. Linderholm 61 Chairman of the Board and President since 1986 1994 10,500 .18
and 1984, respectively, of HWS Consulting
Group, Inc.
Dale L. Young 71 Corporate Secretary since 1991; Retired 1966 51,420(3) .89
Executive Vice President and Cashier of FirsTier
Bank, NA, Lincoln, NE.
SECOND CLASS (TERM EXPIRING DECEMBER 14, 2000):
John J. Brasch 59 President, Senior Technologies, Inc. since 1985. 1997 7,250 .13
James L. Carrier 50 President and Chief Executive Officer, Lester 1997 2,417 .04
Electrical, Inc., since 1979.
Douglas M. Grant 53 President and Chief Operating Officer since 1988 40,991 .71
October 6, 1995; Vice President August 31, 1989 to
October 5, 1995; Environmental Division General
Manager May 26, 1987 to July 15, 1996.
Philip M. Wittig 65 Chief Financial Officer and Treasurer since 1967. 1967 43,772(4) .76
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Executive Officers of the Company collectively hold 2,861,927 shares or 49.43
percent of the outstanding Common Stock plus currently exercisable options.
Executive Officers and Directors collectively hold 2,933,527 shares or 50.67
percent of the outstanding Common Stock plus currently exercisable options.
(1) Unless otherwise noted, all shares are held with sole investment and voting
power.
(2) Percentage computed by dividing the number of shares beneficially owned,
including options currently exercisable, by the total shares outstanding on
October 15, 1999, including currently exercisable options.
(3) Includes 20,000 shares as to which Dale L. Young has shared voting rights
and investment power
(4) Includes 644 shares as to which Philip M. Wittig has shared voting rights
and investment power.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS.
The Company's Board of Directors has not established a Nominating Committee.
The Audit Committee, during fiscal 1999, was comprised of Directors James L.
Linderholm, Chairman; James L. Carrier, Secretary and John J. Brasch. All are
independent members of the Board. The Audit Committee assists the Board in
fulfilling its fiduciary responsibilities with respect to accounting policies,
reporting practices, and the sufficiency of the Company's annual audit. The
Committee met three times during fiscal year 1999.
The Compensation Committee, during fiscal 1999, was comprised of Directors John
L. Brasch, Chairman; Dale L. Young, Secretary; James L. Carrier; and Robert W.
Allington (a non-voting member). The Committee recommends to the Board the
compensation programs and salaries for the officers and also acts as the stock
option committee. The Committee met three times during fiscal 1999.
The Board of Directors met 12 times in fiscal 1999. All of the directors
attended greater than 75 percent of the total meetings held by the Board and its
committees in fiscal 1999 with the exception of John L. Brasch and James L.
Carrier.
4
<PAGE>
LIST OF CURRENT EXECUTIVE OFFICERS OF THE COMPANY.
The following is a list of the names and ages of the current executive officers
of the Company and their business history for the last five years.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR FIRST BECAME
POSITION AND PRINCIPAL OCCUPATION EXECUTIVE OFFICER
NAME OF INDIVIDUAL AGE SINCE JULY 30, 1994 OF THE COMPANY
- ------------------- --- ------------------------------------------------------------- --------------------
<S> <C> <C> <C>
Robert W. Allington 64 Chairman of the Board and Chief Executive Officer since 1959; 1959
President 1959 to October 5, 1995.
Vicki L. Benne 37 Assistant Treasurer since January 2, 1999; Controller and Chief 1991
Accounting Officer October 21, 1989 to January 1, 1999.
Alfred G. Craske 56 Vice President, Sales and Marketing since July 18, 1996; Director, 1996
Sales and Marketing, May 20, 1996 to July 18, 1996; Vice President,
Marketing, Gelman Science, Inc. 1994-1996.
Douglas M. Grant 53 President and Chief Operating Officer since October 6, 1995; Vice 1987
President August 31, 1989 to October 5, 1995; Environmental
Division General Manager May 26, 1987 to July 15, 1996.
John J. Korab, Jr. 50 Vice President, Corporate Development since December 11, 1989. 1989
Donald E. Wademan 35 Controller and Chief Accounting Officer since January 2, 1999. 1999
Assistant Controller, June 15, 1998 to January 1, 1999. Division
Controller, Hoover Materials Handling Group Inc., June 1995 to
June 1998; Audit Manager, Deloitte & Touche, September 1992
to June 1995.
Philip M. Wittig 65 Chief Financial Officer and Treasurer since 1967. 1967
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION.
The following table sets forth a summary of the compensation paid to the chief
executive officer and the four other executive officers of the Company whose
compensation exceeded $100,000 for the fiscal years ended, July 30, 1999, July
31, 1998, and July 25, 1997.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Long-term Compensation
--------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------------------------------------------
Other Restricted Options/ LTIP All Other
Name and Principal Fiscal Salary Bonus Annual Stock SARs Payouts Compensation
Position Year ($) ($) Compensation(1) Awards (#) ($) ($) (4)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. Allington 1999 205,521 -- 47,706 -- -- -- 214
Chairman and Chief 1998 205,521 -- 45,169 -- 49,474(3) -- 91
Executive Officer 1997 205,520 -- 27,541 -- -- -- 1,583
- -------------------------------------------------------------------------------------------------------------------------
Douglas M. Grant 1999 179,999 -- 8,384 -- -- -- 2,384
President and Chief 1998 172,307 -- 7,192 -- 46,259(3) -- 2,219
Operating Officer 1997 160,002 -- 6,229 -- -- -- 3,173
- -------------------------------------------------------------------------------------------------------------------------
Alfred G. Craske 1999 132,384 20,000(5) 75 -- -- -- 2,394
Vice President, Sales 1998 127,452 -- 940 -- 21,224(3) -- 2,701
and Marketing 1997 124,279 18,750 7,767(2) -- 10,000(3) -- 511
- -------------------------------------------------------------------------------------------------------------------------
Philip M. Wittig 1999 118,185 -- 2,629 -- -- -- 2,314
Chief Financial Officer 1998 115,519 -- 5,073 -- 21,224(3) -- 2,118
and Treasurer 1997 114,365 -- 4,629 -- -- -- 3,490
- -------------------------------------------------------------------------------------------------------------------------
John J. Korab, Jr. 1999 99,002 -- 75 -- -- -- 1,828
Vice President, 1998 99,002 -- 75 -- 9,796(3) -- 1,607
Corporate Development 1997 99,002 12,000 75 -- -- -- 2,933
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During fiscal 1996, the Company modified its vacation policy to limit the
number of accrued vacation hours an employee could have on each anniversary
of his or her employment. Those hours in excess of the established limit
related to length of service were valued, frozen, and scheduled for payment
over a maximum period of six years. In addition, the policy included a
future paid-in-lieu-of provision whereby following the employee's
anniversary he or she would be paid for hours of accrued vacation which
were in excess of the established limit provided, however, that the
employee had actually taken a minimum number of vacation hours during the
preceding year. These combined payment amounts are included in "Other
Annual Compensation" and for fiscal 1999, 1998, and 1997, respectively,
were as follows: Mr. Allington, $39,256, $37,888, and $23,446; Mr. Grant,
$1,386, $6,923, and $6,154; and Mr. Wittig, $2,554, $4,998, and $4,554.
(2) Includes reimbursed moving and transition expenses of $7,692.
(3) Options granted pursuant to the 1996 Stock Option Plan.
(4) The amounts set forth under "All Other Compensation", include
profit-sharing contributions, and forfeitures plus 401(k) matching
contributions and forfeitures. Profit sharing contributions including
forfeitures and 401(k) matching contributions including forfeitures,
respectively, for fiscal 1999 were as follows: Mr. Allington, $214 and $0;
Mr. Grant, $214 and $2,170; Mr. Craske, $173 and $2,221; Mr. Wittig, $156
and $2,158; and Mr. Korab, $128 and $1,700.
(5) Bonus earned based on fiscal year 1999 performance and paid in fiscal 2000.
6
<PAGE>
The following table sets forth information with respect to exercised and
unexercised options and SARs, if any, during fiscal 1999 and exercised and
unexercised options and SARs, if any, held by the chief executive officer and
the four other most highly compensated executive officers of the Company during
fiscal 1999.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of securities Value of unexercised
Shares underlying unexercised in-the-money
Acquired options/SARs at options/SARs
on Value fiscal year end (#) at fiscal year end ($)
Exercise Realized Exercisable ("Ex") Exercisable ("Ex")
Name (#) ($) Unexercisable ("Un") Unexercisable ("Un")
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert W. Allington -- -- 12,369 shares ("Ex") *
37,105 shares ("Un") *
- ---------------------------------------------------------------------------------------------------------------------
Douglas M. Grant -- -- 6,900 shares ("Ex") *
4,600 shares ("Un") *
20,000 shares ("Ex") *
20,000 shares ("Un") *
9,252 shares ("Ex") *
37,007 shares ("Un") *
- ---------------------------------------------------------------------------------------------------------------------
Philip M. Wittig -- -- 2,300 shares ("Ex") *
4,245 shares ("Ex") *
16,979 shares ("Un") *
- ---------------------------------------------------------------------------------------------------------------------
Alfred G. Craske -- -- 10,000 shares ("Ex") *
4,245 shares ("Ex") *
16,979 shares ("Un") *
- ---------------------------------------------------------------------------------------------------------------------
John J. Korab, Jr. -- -- 2,484 shares ("Ex") *
1,656 shares ("Un") *
1,959 shares ("Ex") *
7,837 shares ("Un") *
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Share option price is not in-the-money.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee ("Committee") for fiscal 1999 was comprised of
Directors John J. Brasch, Chairman; Dale L. Young, Secretary; James L. Carrier;
and Robert W. Allington (a non-voting member). Messrs. Brasch, Young, and
Carrier are non-employee directors. The Committee reviews and recommends to the
Board the direct and indirect compensation and employee benefits of the Chairman
of the Board, the President, and other elected officers of the Company. The
Committee also acts as the stock option committee.
Compensation Principles. The philosophy of the Company with regard to executive
compensation is to design executive compensation programs in a manner intended
to enhance Company performance and shareholder value by achieving the following
objectives:
- - Provide reasonable and appropriate levels of compensation that will
attract, motivate, and retain highly qualified executives;
- - Integrate compensation with the Company's business and strategic plans;
- - Reward both business and individual performance; and
- - Encourage stock ownership by executives, thereby aligning executive
compensation with shareholder value.
7
<PAGE>
Executive Officer Compensation Program. The Company's compensation program for
executive officers consists of annual salary, bonuses, and periodic grants of
options to purchase the Company's Common Stock. In addition, executives are
entitled to customary benefits, including medical, vacation, and retirement
benefits, that are generally available to employees of the Company. Salary and
bonus payments are designed to reward current and past performance, while the
stock options are intended to provide incentives for long-term future
performance and are directly linked to the interests of the shareholders because
the value of options will increase or decrease based directly upon the future
price of the Company's Common Stock.
Base Salary. The base salary levels of the Company's executives are evaluated
periodically by the Committee in view of specific job responsibilities and
prevailing salary levels of companies of comparable size and complexity. The
consulting firm of Burgess & Associates assists the Committee in these periodic
reviews. In addition the Committee utilizes as aids the Ernst & Young National
Survey of Executive Compensation, the Wyatt Data Service ECS survey, and
Compensation in the Accounting/Financial Field published by Abbott, Langer &
Associates. During fiscal 1999, one executive officer received a salary
adjustment.
Annual Bonus Compensation. The Committee believes that cash incentives, in the
form of bonuses and stock options, are warranted for the achievement of Company
goals and corporate and individual performance. The short-term incentive bonus
and stock option plan adopted by the Committee and the Board of Directors in
January, 1998 was based upon the achievement of certain targeted revenue and
operating income goals. The target goals were set for fiscal years 1998, 1999,
and 2000. Depending upon a covered executive's area of responsibility, the
executive could receive 100% of the incentive compensation if the maximum
revenue goal was met or if the maximum operating income goal was met. If both
maximum goals were met, the executive could receive a maximum of 150% of the
targeted incentive compensation. No benefits under the short-term incentive
bonus plan were earned during fiscal 1999. Subsequent to fiscal 1999, one
officer did receive a bonus related to achieving individual performance goals
related to fiscal 1999.
Stock Option Compensation. During fiscal 1999, no additional stock options were
granted nor did any existing shares vest due to the Company not achieving
targeted sales and operating income goals.
Overall Review. Fiscal 1999 has been an important year for our Company with the
completion of the major addition to and the renovation of the Superior Street
facility. The integration of Geomation, Inc., STIP Siepmann und Teutscher GmbH
in Germany, and the limited partnership agreement negotiated with AMJ Equipment
Corporation should strengthen and expand several of our product lines. The
Committee believes that the executive officers of the Company are positively
addressing the Company's problems and opportunities and that the compensation
for the executive officers is fair and reasonable for both the officers and the
shareholders of the Company.
Submitted by the Compensation Committee of the Company's Board of Directors.
John J. Brasch, Chairman
Dale L. Young, Secretary
James L. Carrier
Robert W. Allington (non-voting member)
PERFORMANCE GRAPH.
The following performance graph compares the performance of the Company's Common
Stock to the Standard and Poor's 500 Stock Index and the NASDAQ peer group. The
industry peer group, selected by the Company, is comprised of 88 companies whose
stock is traded on NASDAQ and are included in the Standard Industrial Code
Classification No. 382 entitled "Measuring and Controlling Devices". The graph
assumes that $100 was invested on July 30, 1994 in the Company's stock and the
indices. It, also, is assumed that dividends were reinvested when paid and that
the fiscal year ends July 30.
8
<PAGE>
Data Points for Graph.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Isco, Inc. 100 113 106 94 77 71
PEER Group 100 196 134 233 149 241
S&P 500 100 126 147 224 267 321
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
RETIREMENT PLAN.
The Company's defined contribution retirement plan includes a profit sharing
provision and a 401(k) provision that covers all employees meeting age and
service requirements. Significant provisions of the plan include the following:
(i) an employee may reduce his or her salary by up to 12 percent, and the
Company will match the reduction, up to 10 percent, with a 20 percent matching
contribution; (ii) the Company's profit sharing contribution to the plan is
equal to approximately 7 percent of its net earnings before income taxes; (iii)
the Company's aggregate contribution to the plan is limited to 15 percent of the
aggregate compensation of the plan participants; (iv) participants vest 20
percent of employer profit sharing and employer 401(k) matching contributions
after three years of service and 20 percent per year thereafter until 100
percent vested. Management and administrative costs of the plan are borne by the
Company. For fiscal year 1999, amounts contributed to the plan for the chief
executive officer and the four other most highly compensated executive officers
of the Company are set forth as part of the table appearing in the Executive
Compensation section.
COMPENSATION OF DIRECTORS FOR FISCAL 1999.
The Directors' Deferred Compensation Plan has been in effect since January 1996.
Under the Directors' Deferred Compensation Plan, all Directors receive 35
Deferred Stock Units for each Board and Committee meeting attended, and 240
Deferred Stock Units for the annual Board retainer. In addition, the Corporate
Secretary receives an additional 250 Deferred Stock Units annually for serving
as Corporate Secretary. At the time the Director ceases to be a member of the
Board, the Director's accumulated Deferred Stock Units are converted to shares
of the Company's Common Stock at a ratio of 1 to 1 and distributed. Inside
Directors do not receive compensation for attending committee meetings.
The number of Deferred Stock Units earned by each of the directors during fiscal
1999 are as follows: Mr. Allington 643, Mr. Brasch 667, Mr. Carrier 704, Mr.
Grant 610, Mr. Linderholm 823, Mr. Wittig 644, and Mr. Young 1,114.
2. AMENDMENT NO. 1 TO THE ISCO, INC. 1996 STOCK OPTION PLAN.
On July 15, 1999 the Board of Directors of the Company adopted an amendment
("Amendment No. 1") to the Isco, Inc. 1996 Stock Option Plan (the "Plan") to
increase the number of Shares of common stock that may be issued under the Plan
from 250,000 Shares to 500,000 Shares, or an increase of 250,000 Shares. As of
October 15, 1999, the Company had issued options of 219,724 Shares under the
Plan in order to provide long-term incentive to key officers and employees.
Since the number of Shares available for grant under the Plan is nearly
depleted, the Board of Directors deems it to be in the best interest of the
Company to increase the amount of Shares available by 250,000 Shares.
If this proposed Amendment No. 1 is adopted, the amended portion of the first
sentence in the second paragraph of Section 6 of the Plan will read as follows:
"The maximum aggregate number of Shares that may be issued under the
Plan is 500,000 Shares. The limitation on the number of Shares which
may be subject to Options under the Plan shall be subject to adjustment
as provided in Section 10(b) of the Plan."
9
<PAGE>
No other provisions of the Plan will be changed or altered by this Amendment No.
1. Options may continue to be granted under the Plan through August 2006.
Options granted under the Plan may either be incentive stock options or
non-qualified stock options.
This Amendment No. 1 will not become effective unless approved by the holders of
the majority of the outstanding Common Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM NO. 2.
ADDITIONAL INFORMATION.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and persons who beneficially own more than 10 percent of
the Company's stock, to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors, and greater than 10 percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
For fiscal 1999, due to an administrative error, Donald E. Wademan's initial
Form 3 was filed late.
INDEPENDENT PUBLIC ACCOUNTANTS. Deloitte & Touche LLP, certified public
accountants, are the independent public accountants for the Company.
Representatives of Deloitte & Touche LLP are expected to be present at the
annual meeting and will be given the opportunity to make any statement they
might desire and will also be available to respond to appropriate questions from
shareholders. Deloitte & Touche LLP has been selected as independent public
accountants for the Company for fiscal year 2000.
OTHER MATTERS. The Board of Directors does not know of any other matters to be
presented at the annual meeting. In the event that other business is properly
brought before the meeting, it is the intention of the proxy holders named in
the proxy to vote the proxies in accordance with the recommendation of the Board
of Directors.
Robert W. Allington
Chairman and Chief Executive Officer
10
<PAGE>
ISCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS DECEMBER 9, 1999
The undersigned hereby constitutes and appoints ROBERT W. ALLINGTON and DALE L.
YOUNG, or either of them, with full power to act alone, or any substitute
appointed by either of them as the undersigned's agents, attorneys and proxies
to vote the number of shares the undersigned would be entitled to vote if
personally present at the Annual Meeting of the Shareholders of Isco, Inc., to
be held at Isco, Inc., 4700 Superior Street, Lincoln, Nebraska, on the 9th day
of December 1999, at 2:00 p.m., or any adjournments thereof, as indicated below.
(1) ELECTION OF DIRECTORS (The Board of Directors recommends voting "FOR" all
nominees.) NOMINEES: Robert W. Allington, James L. Linderholm, and Dale L.
Young
/ / Vote FOR all three nominees (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all three nominees
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the following space.
(2) AMENDMENT NO. 1 TO THE ISCO, INC. 1996 STOCK OPTION PLAN (The Board of
Directors recommends voting "FOR" this amendment.)
/ / Vote FOR
/ / Vote AGAINST
(3) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR AMENDMENT NO. 1 TO THE 1996
STOCK OPTION PLAN, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS.
Dated: ____________________________________, 1999
________________________________________________
Signature of Shareholder
________________________________________________
Signature of Shareholder
Please sign exactly as your name appears at the
left. When signing as attorney, executor,
administrator, trustee, guardian or conservator,
give full title. All joint tenants must sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
/ /I (WE) PLAN TO ATTEND THE ANNUAL MEETING.
